Once hailed as one of the most promising startups in Silicon Valley, 23andMe is now on the verge of collapse. Once valued at nearly $6 billion, the genetic testing company saw its stock price fall to 40 cents per share, with company officials expressing “significant doubt” about its ability to continue without new funding.
Founded in 2006 by Anne Wojcicki and Linda Avey, 23andMe was initially a leader in the DNA testing market. Millions flocked to its DNA test kits to learn about ancestry, health risks, and more. Wojcicki’s strong connections, notably with Google co-founder Sergey Brin, helped attract early investment and credibility. However, today, the company faces revenue declines and rising doubts about its long-term viability.
Revenue Decline and Cost-Cutting Measures
In its latest report, 23andMe revealed a 12% drop in revenue, falling to $44 million for the quarter ending in September 2023. This decline marks the company’s seventh consecutive quarterly revenue loss, largely due to waning demand for its signature saliva-based testing kits. To cut costs, 23andMe recently laid off 40% of its workforce (over 200 employees), aiming to save $35 million annually. Even with these cuts, its share price has dropped more than 70% since early 2024.
Ambitious Goals Met With Financial Struggles
Wojcicki, once a self-made billionaire, aspired to transform 23andMe from a genetic testing company to a drug development powerhouse. But with high interest rates and declining biotech investment, 23andMe struggled to secure additional capital. In response, the company halted its drug development efforts to focus solely on selling DNA test kits and licensing genetic data for pharmaceutical research.
A Declining Subscriber Base
Another challenge is the decline in subscriptions. While the company initially projected 2.9 million subscribers by March 2024, it only reached 562,000 as of the most recent count. This shortfall has hindered Wojcicki’s vision of building a stable revenue stream and reinforcing 23andMe’s market presence.
As Nasdaq warns of a potential delisting, 23andMe’s survival now depends on finding new investors willing to back a once-bright company struggling to adapt and survive in an increasingly competitive landscape.
